MRCB-DMIA eyeing RM3b rail job

THE government is planning to revive a plan to build a railway line for freight trains to ease the congestion in Kuala Lumpur's central hub, and a joint venture led by state-controlled Malaysian Resources Corp Bhd (MRCB) has emerged as the front runner to wrest control of the roughly RM3 billion infrastructure undertaking.

According to industry executives familiar with the government's proposal, MRCB and DMIA Sdn Bhd have jointly submitted a plan to build a railway line for freight trains, linking Serendah to Port Klang, to help ease the bottleneck at the KL Sentral area.

The plan, which has received the backing of key government ministries, is expected to be submitted to Suruhanjaya Pengangkutan Awam Darat (SPAD), the national transport commission, as early as next month.

Meanwhile, industry executives say MRCB and DMIA have made considerable headway in their plans and could secure the job as early as next year. However, industry executives say several other companies are also eyeing the project and are expected to submit competing proposals in the coming weeks.

Subramaniam Pillai Sankaran Pillai, DMIA's controlling shareholder, acknowledged the interest in the freight train railway line. "We are still exploring it," he says, without elaborating.

But MRCB declined to comment directly on the proposal. "MRCB continues to explore with existing and past partners, including DMIA, new potential businesses and joint ventures, especially those relating to our core business activities" it says in its response to queries for this article.

Freight trains, laden with heavy cargo, travel at slower speeds, hence causing congestion in the national railway network, especially for passenger trains.

SPAD CEO Mohd Nur Kamal says the agency has yet to receive any proposal on the proposed railway line from the private sector. But the proposed route linking Serendah and Port Klang is highlighted in the agency's master plan.

Keretapi Tanah Melayu Bhd (KTMB), which is a subsidiary of the Ministry of Finance, was directed by the government to carry out a preliminary engineering and route alignment study for the planned Serendah-Port Klang-Seremban by-pass line in September 2008. But KTMB has done little about the plan, prompting private sector players to push the government to award the project under the country's privatisation programme.

MRCB has experience in the transport sector and was the principal driver behind the multibillion-ringgit Kuala Lumpur Sentral and Penang Sentral projects.

For the six months ended June 30, MRCB posted a net profit of RM27.31 million on the back of RM670.13 million in sales. Earnings per share stood at 1.97 sen. Compared with a year ago, MRCB's net profit slipped about 29% despite revenue increasing 46.85%.

As at end-June, MRCB had cash and bank balances amounting to RM490.03 million. On the other side of the balance sheet, the company had long-term debt commitments of RM1.08 billion and short-term borrowings of RM896.28 million. It also had RM1.4 billion in shareholders' funds. Its shares closed at RM1.72 last Friday.

The Companies Commission of Malaysia website shows that DMIA is 50.4% controlled by Subramaniam. The other shareholders are Datuk Salehudin Abdullah (20%), Jacqueline Earthayanathan (15.2%) and Nazreen Ahmad (14.4%).

DMIA partnered MRCB for the beautification and upgrading of Little India in Jalan Tun Sambanthan, KL, as well as other development plans in the Brickfields suburb.

According to DMIA's website, the company played a role in the building of the Central Link KLIA Expressway and Rail Link to West Port. It also carried out work on the Electrified Double Tracking project between Rawang and Ipoh where it built the stations and roads. The company has also been involved in infrastructure projects in India.

This story first appeared in The Edge weekly edition of Nov 19-25, 2012.